Airline industry at standstill after COVID-19 delta variant breakout: ACCC

Highlights

  • The breakout of the COVID-19 delta variant resulted in travel restrictions, and it has blown the local airline industry.
  • A significant decrease is reported in the passenger numbers.
  • One of the three flights was cancelled in major Australian airports.

The breakout of the COVID-19 delta variant resulted in travel restrictions and it has blown the local airline industry as indicated by the Airline Competition in Australia report by ACCC.

To what extent local airline industry of Australia is affected?

The report projected that passenger number was 23% of pre-pandemic levels in July 2021, and reached its peak of 68% of the pre-pandemic level in April 2021. It is estimated that passenger numbers for the month of August and September will be even lower.

In July 2021, one in three flights was cancelled in Rex, Virgin, Jetstar and Qantas combined. A 91% fall in passenger number was reported from mid-May to June in Victoria and a 97% drop was observed in NSW from June to July.

Sydney airport is Australia’s busiest airport and was not recognized as the top 10 busiest routes in July.  

Temporary stand-downs were implemented by Rex, Virgin, Jetstar and Qantas due to the cancellation of flights.

What are the concerns of ACCC for the airline industry?

The airline industry is optimistic regarding the increase in demand after the ease in the borders restrictions and vacation targets are reached. Despite the optimism, the ACCC is concerned that airports might increases the charges significantly to recover the losses during the pandemic.

The report stated that this step will not be consistent with the Aeronautical Pricing Principle and will be seen as airports taking advantage of their monopoly.

What steps will be taken by ACCC to help local Australian airlines?

Peter Harris review that is commissioned by the Australian Government extended a scheme for managing the Sydney airport. The recommendation is to limit the access to take-off and landing slots.

Rod Sims, ACCC chair supported the suggestion as he stated that, “The recommendations proposed by Peter Harris, such as greater transparency and a stronger system for monitoring compliance with airport slot rules, should make more slots available for new and expanding airlines.”

Bottom Line

The local airline industry of Australia is blown because of eth travel restrictions imposed after the breakout of COVID-19 delta variant. A significant impact was observed on the airlines and ACCC heard that airlines might increase the prices significantly to recover their losses which will further have a negative impact on eth customers and economy. To avoid the inflation of prices, ACCC is planning to control the take-off and landing slots to make pricing competitive.

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